More hints, but no action (yet) as the Fed jawbones

• More and more FED talk – and more hints about hinting but no action.

• Markets waffle as it digests the latest comments but futures are higher today.

• Bitcoin back above $40k, Ethereum at $2,800.

• Oil holding tight at $66.

• Try the Greek Style Shrimp for Memorial Day Weekend.

Hello, hello……It’s Wednesday – stocks struggled yesterday…. going positive to negative to positive to negative all in a day’s work as the market remained devoid of any catalyst to provide real direction…in fact, the waffling back and forth suggests that the markets and investors are tiring…..….all while the FED continues to dismiss any pricing pressures as nothing more than transitory.  While the focus is squarely on the FED commentary about inflation, let’s not forget about the outsized policy support that is expected to remain in place for a very extended period of time (or is it?). 

Look, the markets appear to be tiring as they retake the losses seen over the last couple of weeks…taking them closer to the ytd highs than not, commentary from the FED is doing exactly what they want it to do…. calm investor fears as talk of talking about tapering become more of reality while doing nothing remains the current path…….
And yesterday we heard from two more FED members - 1. San Francisco’s FED President Mary Daly – who said, “It’s way too early” and ‘We are talking about talking about tapering’ while emphasizing that no one misunderstands her message saying
“I want to make sure that everyone knows that it’s not about doing anything now” – we are still 8 million jobs short of where we were and she believes that ‘Right now, policy is in a very good place….and we need to be patient.’

And 2. – Vice Chair Richie Clarida – who opened the door just a bit saying that “It may well be that there will come a time in upcoming meetings that we can begin to discuss scaling back the pace of asset purchases…”  apparently, that is also not now….and he also said that the FED could manage any overshoot of inflation without derailing the economy……. suggesting that nothing is about to change anytime soon…….

But what we are seeing is that more of the FED members appear to be more comfortable about talking about a pullback….…and that is exactly what Fed Chair Jay Powell told us…..that he and the FED will give us a long runway to hear that message, they will talk about talking about tapering without tapering until we all get to the point of no return and beg the FED to just do it….saying enough already…..just do it…..and at that point, the markets will be ready….for the tapering to begin…..It’s all very orchestrated – it’s called ‘Jawboning’ ….but there is no guarantee that the markets will not react negatively…..so we wait…

The 10 yr. treasury yield fell to 1.56%, the VIX rose 3% (nothing really), Eco data showed that the FIFA housing price index rose more than the expectation and the S&P Core logic 20 city housing price index also rose more than expected……revealing that demand continues to overwhelm supply forcing prices higher and higher………with new homes rising 20+% y/y and existing homes rising 19% y/y……..again if you were surprised then you‘ve been living under a rock!  WTI – crude oil - waffled around the $66 mark and Gold rallied 0.8% up and thru $1,900/oz….as investors are clearly betting that the inflation story is more than just transitory….  At 4 pm the Dow was off 82 pts or 0.25%, the S&P’s gave up 9 pts or 0.20%, the Nasdaq lost 4 pts or 0.03% while the Russell gave back 22 pts or 0.9%.

US futures are up this morning – …Dow futures are up 73 pts, S&P’s up 11 pts, the Nasdaq up 34 pts, and the Russell adding 9 pts.  Bitcoin has now retaken $40k and Ethereum is trading at $2,800.  The 10 yr. treasury is yielding 1.56% and the VIX is expected to be lower again.  I think the market will remain in a holding pattern defined by 4087/4230 until the next FED meeting on June 15th-16th….. Will this be the meeting that will change the path of policy or not?  My sense is no….the policy change will most likely happen in the fall after 4 more months of data….but expect the hints to keep coming as they ready the markets for that eventual conversation.   Today the markets will hear from Vice Chair Randy Quarles who is also expected to tell the same story…..that we can hint all we want but that there are no plans to do anything just yet…. – thus the move higher in the futures.

Eco data today includes Mortgage apps – and they are down 4.2%.....which makes some sense considering we saw existing home sales decline by 2.7% and New Home Sales of -6%.   

European markets are all slightly lower in what appears to be a cautious tone…. all at 6:30 am - the FTSE -0.24%, CAC 40 +0.06%, DAX -0.22%, EUROSTOXX -0.15%, SPAIN -0.10% and ITALY -0.25%. 

The S&P closed at 4188 – leaving us once again just 1% below all-time highs……This morning’s action will test 4200 on the opening bell if nothing changes….. I am still in the camp that the volatility is NOT over so take advantage of any price moves to trim and rebalance into names that have underperformed.

Greek Style Shrimp 

This is another simple summer dish – works well for a back yard cookout and considering that the summer is about to kick off – they make plans for this dish.

You need 1 ½ lb. of cleaned and deveined Jumbo shrimp, olive oil, ouzo, smashed garlic cloves, lemon zest, s&p, 1 med yellow onion, 1 med red bell pepper, 1 med green bell pepper, ½ tsp red pepper flakes, 1 -28 oz can of diced tomatoes – drain the juice but keep it in a bowl, white wine, chopped parsley leaves, feta cheese, and fresh dill.
In a large bowl – mix – olive oil, 1 tbsp of ouzo, 2 smashed garlic cloves, the lemon zest, s&p,  - add the shrimp, toss to coat, and set aside.

In large skillet – add some more olive oil and add in the chopped onion, and the diced red and green peppers – season with s&p – cover and cook until soft.  Maybe 5 mins….and then remove the cover and cook for another 5 mins… Add the other smashed/chopped garlic, and the red pepper flakes.  Add the diced tomatoes and about 1/3 c of the juice, 2 tbsp. of ouzo – raise the heat to high and then turn down to simmer for about 5 mins….it should thicken a bit, but do not let it dry out.

Now add the shrimp with any of the juice that might be in the bowl directly to the skillet. Stir to coat keeping the heat on simmer.  Cook until all the shrimp turn pink on both sides…maybe 7 mins or so…. Remove the pan from the heat and top with the crumbled feta – add the dill and bang – its done.  Serve immediately….